On December 31, 2018, ABC Corp. acquired Garlic Corp.’s P1,000,000 notes for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%, payable annually. THe notes mature in five years and classifies as financial asset at amortized cost. At December 31, 2020, the note is considered credit-impaired. Management determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity. At December 31,2021, because of the improvement in the credit rating of Garlic Corp., Sinait Corp. reassessed the collectibility of the note and now expects to collect P900,000 from Garlic Corp, at maturity date. The required loss allowance at December 31,2020 is Interest income to be recognized in 2021 profit or loss The impairment gain to be recognized in 2021 profit or loss is
On December 31, 2018, ABC Corp. acquired Garlic Corp.’s P1,000,000 notes for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%, payable annually. THe notes mature in five years and classifies as financial asset at amortized cost. At December 31, 2020, the note is considered credit-impaired. Management determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity. At December 31,2021, because of the improvement in the credit rating of Garlic Corp., Sinait Corp. reassessed the collectibility of the note and now expects to collect P900,000 from Garlic Corp, at maturity date. The required loss allowance at December 31,2020 is Interest income to be recognized in 2021 profit or loss The impairment gain to be recognized in 2021 profit or loss is
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 30E
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On December 31, 2018, ABC Corp. acquired Garlic Corp.’s P1,000,000 notes for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%, payable annually. THe notes mature in five years and classifies as financial asset at amortized cost.
At December 31, 2020, the note is considered credit-impaired. Management determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity.
At December 31,2021, because of the improvement in the credit rating of Garlic Corp., Sinait Corp. reassessed the collectibility of the note and now expects to collect P900,000 from Garlic Corp, at maturity date.
- The required loss allowance at December 31,2020 is
- Interest income to be recognized in 2021 profit or loss
- The impairment gain to be recognized in 2021 profit or loss is
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